Train operating firm Abellio has pulled its bid for the £5bn Wales and Borders franchise following the collapse of Carillion.
Carillion was lined up to be its infrastructure management partner for the construction of the South Wales Metro, which forms a key part of the bid. Aecom was lined up as the bid’s design partner.
Abellio was unable to go ahead with the bid after Amey – part of the rival KeolisAmey bidding team – was give the go-ahead by Carillion’s liquidator to buy most of Carillion Rail, according to the Welsh government.
It is the second firm to pull out of the competition. Late last year Arriva Rail Wales, which was working with Costain on the bid, pulled out.
This leaves two in the running: KeolisAmey and MTR Corporation (Cymru), which is working with Bam Nuttall.
A statement from Welsh transport secretary Ken Skates said: “A consortium member for another bidder yesterday successfully purchased the majority of Carillion Rail from the liquidator. Whilst this has safeguarded a number of jobs in Carillion Rail, it has unfortunately left ARC unable to secure the capability it would need to proceed. On the evening of Thursday 22 February, ARC informed Transport for Wales of its intention to withdraw from the process.”
An Abellio spokesperson said: “Following the liquidation of Carillion PLC on Monday 15 January, Abellio Rail Cymru has taken the decision to withdraw from the contract letting process for the Wales & Borders Rail Service and South Wales Metro competition.”
The £5bn operator and development partner (ODP) contract will involve the operation of the Wales and Borders rail franchise and the design and build of a metro-style service on the Core Valleys Lines. It also involves subsequent infrastructure management of the Core Valleys Lines – the lines which will be used for the Metro – the operation of rail and related aspects of the South Wales Metro service, and the design and development of further rail schemes in Wales.
Heavy rail infrastructure outside of the Core Valley lines will remain with Network Rail.
For the Core Valley lines, responsibility will transfer to the Welsh Government through Transport for Wales (TFW), subject to an agreed evaluation of the assets between Network Rail and the Welsh Government.
Skates said the procurement process would continue as planned: “The procurement evaluation will continue and ARC’s withdrawal does not expose the Welsh Government to any financial risk or delay to the process. At the time final tenders were submitted in December, three bidders remained in the process. Final tenders were therefore prepared with strong competitive pressure. Final tenders are binding and remaining bidders could not alter them now ARC has withdrawn.
“We have two strong bidders remaining in the process and remain on target to award this exciting contract in May 2018 and to transform rail services in Wales and borders from October 2018.”
A tender process is currently underway to find civil engineering suppliers for a £700M framework to build the metro.
Mott MacDonald has provided engineering consultancy to Transport for Wales for the project.
The statement from Welsh Government transport secretary Ken Skates in full:
“Further to my Written Statement on the impact of the Carillion liquidation on the Wales and Borders rail services and Metro operator and development partner procurement on 17 January, Abellio Rail Cymru (ARC) have notified Transport for Wales that they have withdrawn from the procurement process as of 17:00 on 22 February 2018.
Despite the best efforts of the team of experts, lawyers and counsel at Transport for Wales, and the ARC team, ARC has taken the regrettable decision to withdraw its bid having been unable to overcome the impact of Carillion’s liquidation.
ARC has participated in the procurement process and has contributed professionally throughout. I want to express my thanks to the ARC team for their hard work during the process. It is unfortunate that, having invested significant time, effort and money into the process that they should be a further victim of the liquidation of Carillion.
Transport for Wales learned of Carillion’s share price drop in July 2017 and raised this with ARC. At this point ARC considered options but elected to stay with it’s consortium partner, Carillion. As a consequence Transport for Wales required independent financial guarantees by a bank for Carillion’s performance.
When Carillion entered liquidation, Transport for Wales asked ARC to provide a proposal which demonstrated that ARC could still deliver the Final Tender without changing essential elements of it. The liquidator has since been in discussion with a number of parties to sell Carillion Rail and to secure jobs, and it was possible that through this process, ARC could have secured the relevant capability. ARC was required to present a firm proposal once the liquidator had made its decision, by 17:00 on 22nd February.
A consortium member for another bidder yesterday successfully purchased the majority of Carillion Rail from the liquidator. Whilst this has safeguarded a number of jobs in Carillion Rail, it has unfortunately left ARC unable to secure the capability it would need to proceed. On the evening of Thursday 22nd February, ARC informed Transport for Wales of its intention to withdraw from the process.
Transport for Wales has analysed the robustness and technical capability of the remaining bidders and are confident that they are both capable of providing a high quality solution that will enable us to transform rail services right across Wales.
I would like to further recognise ARC’s contribution to this process. The team’s enthusiastic and professional involvement to date has contributed significantly to the procurement process.
The procurement evaluation will continue and ARC’s withdrawal does not expose the Welsh Government to any financial risk or delay to the process. At the time Final Tenders were submitted in December, three bidders remained in the process. Final Tenders were therefore prepared with strong competitive pressure. Final Tenders are binding and remaining bidders could not alter them now ARC has withdrawn.
We have two strong bidders remaining in the process and remain on target to award this exciting contract in May 2018 and to transform rail services in Wales and borders from October 2018.
This statement is being issued during recess in order to keep members informed. Should members wish me to make a further statement or to answer questions on this when the Assembly returns I would be happy to do so.”